Aim your baloney detector at the BS in health care

BS, what Princeton philosopher Harry Frankfurt once called a “lack of connection to a concern with truth — this indifference to how things really are,” has probably been around since the beginning of language. It’s now common in American discourse about politics (just tune in to any cable news channel), entertainment, and sports.

We’ve noticed an influx of BS in health care. You don’t have to look far to spot it. Just think of Theranos and IBM Watson. We are wondering if several new corporate “turduckens” — like the joint effort of Amazon/Berkshire Hathaway/JP Morgan, or hospitals combining with medical groups, or mergers and acquisitions creating a single company that’s an insurer, a pharmacy benefit manager, and a pharmacy — are for real or just turkeys.

While BS can be funny, it can also be sad, and worrisome. Thanks to social media, BS today can spread faster and farther than the truth.

Health care has an acute BS problem, in part because BS can sometimes fill the bill. Suppose you are asked to address an ageless problem in health care: reduce costs while simultaneously raising quality. If you were knowledgeable to begin with or did some research, you would know there is no easy solution. You could respond with a message of failure or a discussion of inevitable trade-offs.

But you could also pick an idea with some internal plausibility and political appeal, surround it with careful but conditional language, and launch a program. It will, you note, take several years before it is successful, but you and your colleagues will argue for the idea in concept, with the details to be worked out later.

At a minimum, unqualified acceptance of such ideas, even (and especially) by apparently qualified people, will waste resources that could have been used to make the best of what we currently have, and will lead to enormous frustration for the audience of politicians and outraged critics of the current system who want answers and want them now.

The incentives to generate BS are not likely to diminish — if anything, rising spending and stagnant health outcomes strengthen them — so it is all the more important to have an accurate and fast way to detect and deter BS in health care.

In a lively 1969 speech to the National Council of Teachers of English entitled “Bullshit and the Art of Crap Detection,” educator, media theorist, and cultural critic Neil Postman said that “helping kids to activate their crap-detectors should take precedence over any other legitimate educational aim … Every day, in almost every way, people are exposed to more bullshit than is healthy for them to endure.”

We have carried Postman’s banner into academia with two reports, one in 2018 and another this year, that identify 21 different forms of BS in health care. Here are our top 10:

#1: Patient Engagement

Patient engagement is one of the cornerstones of the consumerism movement in health care. It means that individuals are concerned about their health status, motivated to do the right things (eat right, exercise, don’t smoke, yada yada yada), talk with their providers, and follow their recommendations. They should also be willing to seek out information about their providers, consider the cost and quality rankings of clinicians and hospitals, and make cost-effective choices regarding their care.

“It might happen. Shyeah! And monkeys might fly out of my butt,” as Wayne Campbell of Wayne’s World might have said. Most of the scenarios described above rarely happen; if they do, they occur mainly among the “worried well.” Individuals most at risk, generally those with multiple chronic conditions, are perhaps least able to act like consumers and demonstrate the engagement that advocates are looking for. Instead, they are burdened with a host of health, financial, and social problems that undermine efforts to be more proactive. Many of them don’t want to be engaged. They just want to be healed and go home.

Patient engagement is also blunted by third-party insurance coverage. Such coverage can limit an individual’s financial exposure, and efforts to promote more engagement by getting patients to have more “skin in the game” through higher deductibles and co-pays often result in deferrals of needed care. We don’t believe that is the type of consumer behavior we are looking for.

#2: Big Data

The Economist devoted its February 3, 2018, cover page to “How Data Will Transform Health Care.” The article suggests that Apple, Google, Facebook, and Microsoft are poised to disrupt (more about disruption later) the health care industry through new apps, artificial intelligence, and big data.

To be honest, we aren’t sure what “big data” look like. The term often means having more sources of information about a patient, including his or her genetic profile, diagnostic tests, sociodemographic characteristics, and use of medical resources. That’s all well and good. Yet more data is not a solution in itself. As others have argued, big data does not necessarily confer big understanding. It may, instead, just yield more noise from which to distill a signal.

To be useful, big data will require theories of what is associated with what and what causes what. It isn’t clear that the corollary to big data, “analytics,” supplies these missing ingredients. Another issue is that more observations (statistical power) are needed on the two parties closest to the delivery of health care: the doctor and the patient. If big data does not provide that, we are left with a lot of data on a small sample that may not tell us much.

#3: Call in the consultants

Many of the solutions offered to health care providers are developed by consulting firms that tend to use one-size-fits-all, off-the-shelf designs developed in other industries. Modifications for special features of the health care sector, like the need to give authority to physicians and nurses and the special risks of errors, require specialized knowledge that consultants often do not have and so aren’t made. Consultants rarely bother to consider the maxim that “health care is different” or that “all health care is local,” so why bother customizing, even though solutions imported from elsewhere are likely to fail.

#4: Transformation

Transformation is another instance of BS in health care. The term first appeared when the Commonwealth Fund created a Cartesian graph with the industry’s migration from fragmented to integrated providers on the X-axis and from fee-for-service to alternative payment models on the Y-axis. It has been more recently popularized as the movement from “volume to value.”

What’s wrong with transformation? Not all of it ends up well. Just ask Gregor Samsa who, in Franz Kafka’s classic novella, “The Metamorphosis,” wakes up to find himself changed into a monstrous bug. People forget that Samsa’s first thought upon seeing his new “form” is that he hates his job. That sounds a bit like doctors and their view of transformation. Moreover, some transformations don’t indicate progress, just a change in state. A tadpole turns into a frog, but that doesn’t make the frog superior in any way, just different.

There are more serious issues with the notion that health care is currently undergoing a transformation. First, the evidence does not support it; indeed, the pace of change along both the X-axis and Y-axis in the Commonwealth Fund’s graph is remarkably slow. Second, there is no necessary correlation between what is going on along the two axes. Third, it is not clear that this transformation is associated with improvements in quality or reductions in cost suggested by its proponents.

# 5: Synergy

One of the most frequently used (and poorly understood) terms to support new corporate strategies, the word synergy stems from the Greek word suneisis, which means “your rivers of understanding flowing together.” We are not sure corporate strategists have this in mind. Usually, they utter the simplistic phrase “1 + 1 = 3.”

The closest analogy that comes to mind is a good marriage. In such cases, there can indeed be synergy with the strengths of each party complementing the weaknesses of the other, fostering better decision-making, having to buy only one set of china, and having one good set of ears and one good set of eyes at the cinema. Of course, roughly half of all marriages end in divorce (not much synergy there), and half of the remainder are unhappy (not much synergy there, either). In other words, synergy sometimes works in marriage and in business, but often it does not.

What happens when synergy meets corporate strategy? If you are tempted here, you might want to read Alfred Chandler’s book “Scale and Scope: The Dynamics of Industrial Capitalism.” Or consider the extensive literature on corporate diversification. After roughly 50 years of research, the answer to the question of whether diversification improves company  performance is, to quote George Carlin, “definitely no yeah.” Some diversification may help, but not a lot. There is an equal amount of evidence that staying focused in one area is pretty good, too.

#6: Roll-ups

Roll-ups are a favorite strategy for forming horizontal chains of organizations. Entrepreneurs start by buying one outfit; then buy another under the promise of combined market power and efficiencies of scale; and continue on a grander scale as they form a behemoth. Entrepreneurs attract new targets and investors based on these promises (and maybe equity); they satisfy Wall Street analysts by virtue of combining the earnings of the acquired firms to show “growth.” This motivates new targets and investors to join the party. As the late Princeton economist Uwe Reinhardt once pointed out, it is akin to a Ponzi scheme.

Roll-ups have a rather ignominious origin. Wayne Huizinga (of BlockBuster fame) kicked it off by combining smaller garbage hauling companies in the late 1960s into a firm called Waste Management. Considering what followed, he got the name right. Health care companies got into the act during the 1960s and 1970s by forming hospital chains, and again during the 1980s and 1990s by forming physician practice management companies. These health care roll-ups failed to improve quality and reduce cost. They are now making a comeback; the promises of roll-ups today look eerily like the promises floated in the 1980s and 1990s. As we have written elsewhere, those responsible for the past debacles have either died or retired, leaving the current set of managers and investors to possibly repeat the mistakes of the past.

#7: Economies of scale

During the 1990s, Wall Street analysts justified every health care merger based on economies of scale. We liken this metric to Helen of Troy — the rationale that launched a thousand mergers.

The term economies of scale gets repeated so often that everyone assumes they must exist. This is known as the “illusory truth effect,” whereby statements heard repeatedly are more believable than statements heard just once. There is no question that small companies often have high total costs because they must pay for fixed or setup costs just to get going and to exist. Yet many people conclude from this truth that if hospital systems, physician networks, insurers, pharmaceutical companies, and the like just get big enough, efficiencies will emerge. But most health care firms are people intensive and thus lack scale economies beyond a relatively modest size.

Chandler’s book “Scale and Scope” covers this topic. We’ll try to summarize it in a sentence: Scale economies rest on running a higher volume at faster speed over a reduced infrastructure. How many multi-hospital systems have done that?

#8: Bandwagons

Every industry is prone to “collective movements” — meaning everyone jumps on the fashionable bandwagon. This behavior is often driven by fear and uncertainty, with people imitating others as a protective device. Health care has suffered from this behavior for decades. Bandwagon movements have produced waves of hospital mergers and fits of vertical integration and corporate diversification. Such movements are bred by contagion — getting the bug that has infected your competitor. No one has bothered to consider that innovations adopted for bandwagon reasons rarely improve corporate performance. Ideas do not have to be evidence based to diffuse.

#9: Disruption

Clayton Christensen popularized the term “disruptive innovation.” Such innovation involves lower-cost and lower-quality products or services that permeate an underserved (or non-served) market and then migrate upstream to take share away from incumbents who ignore the upstarts. This is a legitimate and important story of how some industries evolved. But does it really apply to health care?

Christensen himself is not even sure, even after writing about the concept for roughly two decades. In 2017, he issued a report titled, “How Disruptive Innovation Can Finally Revolutionize Health care,” (emphasis added).

Many things were supposed to have disrupted the health care industry — retail clinics, ambulatory surgery centers, single specialty hospitals, and the like — but did not. So far, no model offering “much cheaper, almost-but-not-quite-as-good quality” care has taken over in the health care sector. Narrow network health plans, meaning those that offer a limited choice of providers in exchange for lower premiums, are the most plausible current candidate, but buyers are far from satisfied and the plans themselves operate under the threat of backlash, especially for how they treat out-of-network use. Likewise, high-deductible health plans have been spreading, but not without criticism. In neither case have these innovations yet transformed the industry.

# 10: Stage models

Health care consultants, executives, and policymakers are fond of “stage models” — planned endeavors in which things build upon prior efforts in linear progression over time. During the 1990s, consultants proposed four stages through which health markets would evolve from fragmented competition to consolidated delivery systems. During the last few years, we have witnessed three stages of “meaningful use” for electronic medical records as well as four stages in the movement to value.

Proponents seem undeterred by the evidence that these models are often simplistic and wrong. Change is messy, with early results often going south into the “valley of despair.” One thing does not necessarily lead to another, it’s sometimes important to double back, and unpredictable jumps arise that bypass the planned route and require a shortcut. But how do you put all of that into a PowerPoint slide that motivates people to go along with the change?

Identifying BS in health care

Astrophysicist and celebrity Carl Sagan once developed a baloney detection kit to root out bogus science. Here are some of the tools he included:

• seek independent confirmation of the “facts”
• encourage debate on the evidence
• “authority” carries no weight in the argument
• consider multiple working hypotheses
• insist on a complete chain of evidence

That’s not a bad place to start for people trying to make sense of what’s going on in the health care space.

Lawton R. Burns, Ph.D., is professor of health care management and management at the University of Pennsylvania’s Wharton School of Business. Mark V. Pauly, Ph.D., is professor of health care management and business economics and public policy at the Wharton School.